Smuggling around the world: evidence from a structural equation model
Abstract:This article uses a Multiple Indicators Multiple Causes (MIMIC) model to analyse the determinants of smuggling. The analysis reveals that higher corruption and a lower rule of law encourage smuggling. Tariffs and trade restrictions are important push factors, while a higher Black Market Premium (BMP) discourages smugglers. Based on the MIMIC estimates, we calculate an index of smuggling which provides a ranking for 54 countries. We find that smuggling is rampant in Cameroon, Pakistan and Kenya while it is least prevalent in Switzerland, Finland and Sweden.
Document Type: Research Article
Affiliations: 1: Faculty of Business and Economics, Chair of Economics, esp. Monetary Economics,Dresden University of Technology, Dresden01062, Germany 2: Faculty of Business and Economics, Chair of Economics, esp. Public Economics,Dresden University of Technology and Centre for European Economic Research (ZEW), Dresden01062, Germany
Publication date: August 1, 2012